USD/INR Outlook and FX Positioning Strategy - JUNE 2025

USDINR - Market Overview:

Over the couple of weeks the USD/INR pair has been consolidating within a narrow range of 84.50 – 85.75, reflecting a period of subdued directional bias. Importantly, the pair is showing signs of strong technical support in the 84.20 – 84.75 zone, which has been tested and held multiple times, signaling resilience for the short to medium term.

On a monthly timeframe, the pair successfully absorbed corrective pressure during March and April 2025, with a peak drawdown of 3.97%. However, in May 2025, USD/INR stabilized and held above key retracement levels, suggesting that the corrective momentum has potentially exhausted and the pair may be preparing for a renewed upward leg.

Technical Projection:

• Monthly View: Bias – Buy on Dips USD/INR remains structurally positive as long as it sustains above the 84.20–84.75 support band. Any pullbacks into this area may present accumulation opportunities for medium to long-term positioning.

• Weekly View: A weekly close above 85.88 is essential to confirm a breakout and re-establish upward momentum. Such a move would likely open the path toward testing psychological levels near 86.50 and above.

FX Risk Management Strategy:

1. Importers:

   • Short-Term Exposure: Consider covering near-term payables through Forwards or Futures to lock in current rates while maintaining liquidity.

   • Long-Term Exposure: Adopt a structured hedging approach using a combination of Options, Forward Contracts, and Collars to manage volatility while preserving upside flexibility. A layered strategy can help optimize cost and timing.

2. Exporters:

   • Long-Term Exposure: Given the supportive technical structure and potential for upside breakout, it is advisable to hedge long-term receivables through Forward or Futures contracts to secure favorable levels and protect margins.

   
   

Conclusion:

USD/INR’s ability to absorb the recent corrective phase and maintain support above key technical levels suggests a potential shift in momentum. Traders and corporate hedgers should remain vigilant for a weekly close above 85.88, which would validate a breakout scenario. Meanwhile, strategic hedging through a combination of derivative instruments remains critical for both importers and exporters, given the evolving macroeconomic and geopolitical landscape.

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